Bristol-Myers decided against holding a protracted bidding war for ImClone Systems and instead decided to let Eli Lilly & Co win the biotech company without much of a fight.

Instead, Bristol-Myers decided to cash in its 16.6-percent stake in ImClone for $1 billion and walk away.

Bristol said there were advantages to letting go of its hopes to acquire ImClone. The proceeds from the sale of its ImClone stake would put Bristol in an “excellent position” to make other acquisitions. Bristol said it would weigh the purchase of companies or specific products, as well as forging licensing deals.

Bristol said it would make the “right moves at (the) right time.”

Given the current credit market conditions, Bristol may have been wise to walk away. Concerns about pending deals rose after tobacco company Altria Group Inc said last week that it may hold off on closing its $10.4 billion purchase of smokeless tobacco-maker UST Inc until early January, at the request of its lenders.

The spreads on several high-profile deals remain wide, with InBev/Anheuser-Busch at 9 percent and Bank of America/Merrill at 14 percent.

Even ImClone’s stock is trading at a discount to Eli Lilly’s $70 per share offer as investors have concerns about Eli Lilly’s ability to raise $2 billion to $3 billion in debt to help finance the deal, traders said.

Eli Lilly Chief Financial Officer Derica Rice, however, told analysts this morning that “we feel very comfortable at this stage with our ability to finance the transaction.”

But not everyone is convinced.

“Normally a tender offer like this would be able to close in 40 days, yet they are saying it will close in the fourth quarter or early ‘09. Why the uncertainty?” said one arbitrageur who declined to be named.